Modular Construction Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Global Modular Construction Market Trends and Insights

Rapid Urbanisation-Driven Housing Gap

Asia-Pacific’s pace of city growth is stretching conventional building capacity. China’s urbanization rate reached 65% in 2024 and is guided to 70% by 2030, a shift that adds 300 million residents and intensifies demand for faster delivery models. Shenzhen, Beijing, and Shanghai require that 30% of public projects use prefab systems, and India’s Pradhan Mantri Awas Yojana has cleared 1.12 crore urban units, of which 88.62 lakh were completed by 2025^{[1]Press Information Bureau of India, “PMAY Progress Update,” pib.gov.in} . Vietnam expects 40% urban population by 2030 and is piloting industrialized building in Hanoi and Ho Chi Minh City. Even the United Kingdom faces a 4.3 million-home shortfall, which prompted a target of 15,000 modular units each year, although factory capacity constrains current output. These conditions collectively lift baseline demand for the modular construction market.

Supportive Government Incentives and Mandates

Regulators have moved from voluntary guidelines to binding quotas and direct subsidies. California’s Factory-Built Housing program cut permitting cycles from 18 months to 6 months in areas that accepted USD 12 million of state technical aid in 2024. A federal bill, H.R. 10171, proposes USD 30 billion in grants and USD 3 billion in tax credits to accelerate adoption, while Europe’s revised Energy Performance of Buildings Directive requires all new structures to be zero-emission by 2030. Saudi Arabia’s Vision 2030 program targets 300,000 units per year and ranks modular delivery high for speed assurance. These tools improve project economics, favoring the modular construction market over conventional methods.

Faster Project Timelines and Lifecycle Cost Savings

Factory fabrication allows foundations and modules to progress in parallel, compressing schedules by 20-40%. Dallas Fort Worth International Airport’s Terminal F, a USD 4 billion build, is slated for completion 12 months sooner than stick-built peers, cutting USD 150 million in interest expense. A 2024 contractor survey found that 78% of firms using prefab recorded similar schedule gains. Modular designs also enable disassembly, lowering end-of-life disposal costs by up to 50% compared with demolition. These time and cost savings reinforce the appeal of the modular construction market for industrial operators that prize early revenue capture.

Labour-Shortage Mitigation Via Off-Site Fabrication

The U.S. industry must recruit 500,000 workers every year, yet participation rates have slipped since 2024. Factories equipped with automated welding and robotic material handling now deliver the output of 10-15 field crews with reduced error rates. Germany listed 200,000 unfilled construction posts in 2024, prompting HOCHTIEF and Züblin to scale prefab capacity. Japan faces similar pressure as 35% of its building workforce is older than 55. These deficits motivate contractors worldwide to shift toward factory assembly, supporting sustained growth for the modular construction market.

High Upfront Factory and Module-Handling CAPEX

Establishing a mid-scale plant that delivers 500–1,000 housing units each year demands USD 15–25 million for land, cranes, automated welders, and climate-controlled bays. Specialized trailers and escort vehicles add several million more for firms that serve multi-state corridors. Factories must operate at 60-70% utilization to meet breakeven, yet limited access to project finance in emerging markets keeps borrowing costs high. These economics funnel activity toward well-capitalized, vertically integrated players and restrain smaller contractors from entering the modular construction market.

Architectural and Aesthetic Design Constraints

Transport limits module dimensions to roughly 12–16 feet in width, a ceiling that narrows design freedom for bespoke homes or iconic commercial towers. A 2024 American Institute of Architects survey found that 62% of designers cited aesthetic rigidity as the primary obstacle to specifying modular systems. High-rise stacks above 20 stories require reinforced beams that erode weight and cost benefits. Luxury buyers often equate modular with utilitarian finishes, so adoption in top-tier residential and landmark projects remains muted, slowing penetration of the modular construction market in premium niches.

Segment Analysis

By Material: Steel Retains Structural Primacy

Steel captured 83.87% of modular construction market share in 2025 thanks to its favorable strength-to-weight profile and compatibility with automated factory tools. That dominance is expected to persist as high-strength grades such as ASTM A992 allow longer spans while staying within transport weight limits. Automated welding drops labor hours and improves joint quality, further anchoring steel in industrial and multi-story projects. 

Wood—mainly cross-laminated timber—has emerged as a low-carbon alternative in Europe and North America, enjoying double-digit growth under the EU Timber Regulation. CLT stores about 0.8 tons of CO₂ per cubic meter and now meets fire-safety codes up to 18 stories. Concrete modules remain niche due to heavy panel weights that raise logistics costs, while plastic composites are carving out roles in disaster relief where corrosion resistance and airlift ability outweigh structural limits. Continuous material innovation broadens supplier options, yet steel is expected to hold a clear lead in the modular construction market through 2031.

Note: Segment shares of all individual segments available upon report purchase

By Construction Type: Permanent Systems Drive Core Infrastructure

Permanent modular accounted for 67.18% of modular construction market size in 2025 and will stay ahead as airports, schools, data centers, and hospitals seek long-life assets. Integrated mechanical and electrical systems arrive pre-tested, cutting commissioning time and minimizing punch-list items. 

Relocatable modular, growing at 7.35% CAGR, appeal to mining, disaster relief, and temporary healthcare operators that value rapid deployment and reuse. WillScot Mobile Mini manages a fleet of more than 200,000 units under lease contracts that wrap in maintenance, showing how flexible asset models add depth to the modular construction market. The coexistence of long-life and relocatable designs enables suppliers to serve divergent risk profiles and funding cycles.

By Service Stage: New-Build Dominates but Lifecycle Services Expand

New construction represented 71.92% of revenue in 2025 as governments prioritized rapid unit delivery. China’s 30% prefab quota for public projects and India’s urban housing mission underscore demand for first-installation modules. 

After-sales maintenance and refurbishment is growing at a 6.58% rate, signaling a pivot toward recurring revenue. Fleet owners now offer HVAC retrofits, roof replacements, and insulation upgrades that extend useful life by 10–20 years, a model that appeals to pension funds seeking steady income streams. The shift from one-off sales to service contracts strengthens customer ties and enlarges the modular construction market footprint.

By End-user Sector: Industrial/Institutional Hold Lead, Residential Accelerates

Industrial/institutional generated 42.78% of revenue in 2025, led by data centers and pharmaceutical plants that require controlled environments and stringent quality checks. Prefab electrical and cooling blocks cut build cycles in half and help operators meet surging AI workload demand. 

Residential is forecast to rise at 7.86% CAGR because median U.S. new-home prices touched USD 420,600 in 2024, making the 10–20% cost edge of modular units increasingly attractive. City authorities in Los Angeles and San Francisco now issue occupancy permits in as little as nine months for factory-built apartments, a timeline reduction that broadens the modular construction market among first-time buyers.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Asia-Pacific contributed 47.16% of global revenue in 2025 and is expected to expand at 7.21% through 2031. China’s plan to raise its urbanization ratio to 70% by 2030, India’s sizable housing missions, and prefab mandates across Singapore and Malaysia all steer capital toward off-site production. Japanese leaders Sekisui House and Daiwa House export factory know-how into Australia and the United States, strengthening regional value chains.

North America is characterized by labor shortages and large-scale incentives. The proposed USD 30 billion federal grant package and state-level programs shorten approval windows, while mega-projects such as Terminal F at Dallas Fort Worth showcase scale efficiencies^{[2]California Department of Housing and Community Development, “Factory-Built Housing Program Update,” hcd.ca.gov} . Regulatory fragmentation between states, however, still inflates compliance costs and slows shipment across borders, tempering the pace of modular construction market growth.

Europe’s path is defined by decarbonization rules and timber uptake. The Energy Performance of Buildings Directive enforces zero-emission targets, positioning factory-made envelopes as a compliance shortcut. Labor deficits in Germany and the United Kingdom amplify the shift toward prefab methods. Emerging regions, including Saudi Arabia and Brazil, register strong demand but must overcome financing constraints and limited local plant capacity to unlock full contributions to the modular construction market.